Adidas sells off TaylorMade golf unit to private equity firm

17 May 2017

While Adidas has made a decision to stop making equipment, golfers will continue to wear the company logo on the golf course.

"Adidas is not cash strapped, but its current momentum requires all management attention on its core brands Adidas and Reebok", Juergen Kolb, an analyst at KeplerCheuvreux, said in a note. An ESPN examination of the Adidas move notes that although first-time golfer tallies hit a record 2.5 million past year, keeping the newbies courting clubs and related gear has proven hard. Adidas bought the company in 1998.

Adidas is getting out of the golf game.

The deal comes as the golf industry continues to suffer from stagnant participation in the USA and elsewhere, which contributed to the 2016 bankruptcy of golf retailer Golfsmith. Texas club maker Adams Golf was acquired in 2012. Over the past 19 years TaylorMade has grown to become the innovation and performance leader in the golf industry, and has strengthened its market share position in all categories during this period. Adidas can focus on its burgeoning footwear business, while KPS Capital Partners was able to acquire a leading golf brand that does north of $500 million per year in revenues.

"The combination of this iconic brand and KPS' track record of working constructively with talented management teams to make businesses better will provide the ideal foundation for TaylorMade's future growth, " he added. The company went through several layoffs in 2015 amounting to roughly 20 percent of staff, and then-CEO Ben Sharpe was replaced by David Abeles in March 2015 - Sharpe had been on the job for 13 months.

Sources contacted at TaylorMade and KPS Capital Partners did not return requests for comment. Since intentions to sell were announced last May, the company re-signed Jason Day and Dustin Johnson to contract extensions, and on Tuesday announced the addition of Rory McIlroy.

Day and McIlroy will both continue to market shoes and golfing apparel with Nike.